Authored by Mr. Amit Porwal, Director at Aranyakaa Farms
As the world struggles with climate change and ecological damages, investors are increasingly turning to nature-inspired investment opportunities – because these investments not only promise to deliver financial returns but also offer environmental and social benefits. This dual appeal is driving a rise in investments aimed at preserving and enhancing natural resources.
In this article, we will explore strategies for maximising returns in nature-inspired investments like farmland, a farm house or an agricultural land, especially within the Indian context.
Understanding nature-inspired investments
Nature-inspired investments, often referred to as sustainable or green investments, include a range of activities aimed at conserving and restoring natural resources like – sustainable agriculture, afforestation, and eco-friendly real estate developments.
Moreover, in India, the potential for nature-inspired investments is vast, as the country is witnessing a significant push towards sustainable practices in business and otherwise. As seen in initiatives like the Green India Mission that aims to increase forest and tree cover, enhancing carbon sequestration and biodiversity.
Managed farmlands play an integral role in supporting this cause, as they contribute to sustainable agriculture, conservation of natural resources, and rural development. This is because Managed farmlands incorporate practices such as agroforestry and organic farming. Agroforestry, for example, involves integrating trees and shrubs into crop and livestock systems, which can improve the health of the soil, enhance biodiversity, and provide additional income streams for farmers. Likewise, organic farming reduces the dependence on chemical inputs, thereby protecting soil and water quality.
Furthermore, these sustainable farming practices align with India’s broader environmental goals, such as reducing greenhouse gas emissions, conserving water resources, and preserving biodiversity. Thereby, by promoting nature-inspired investments in managed farmlands, India can make significant strides towards a more sustainable and resilient agricultural sector.
Strategies for maximising returns
1. Diversification: As with any investment strategy, diversification is key. Investors should spread their investments across different sectors in their overall portfolio, as this approach mitigates risk and ensures that returns are not overly dependent on the performance of a single sector.
2. Focus on high-Impact projects: Investors should prioritise investments in projects with significant environmental and social impacts like managed farmlands, organic farming projects and related nature-inspired investments, as high-impact projects are more likely to attract government incentives, public support, and additional private investments.
3. Leverage technological innovations: Technological advancements are transforming nature-inspired investments. Innovations such as precision agriculture, satellite monitoring, and blockchain for supply chain transparency enhance the efficiency and accountability of these projects. Investors should seek opportunities that leverage these technologies to improve outcomes and profitability.
The Fractional Ownership Model
One emerging trend in nature-inspired investments is the fractional ownership model. This model allows multiple investors to collectively own a portion of a high-value asset, such as farmland or agricultural land. Fractional ownership lowers the entry barrier for individual investors, providing access to high-cost projects that would otherwise be unaffordable.
Besides, Investing in managed farmlands through fractional ownership is particularly attractive because it is less risky; dedicated professionals manage the land, ensuring optimal agricultural practices and consistent maintenance. This professional oversight means that investors can trust where their money is going, with regular updates and transparent reporting on the land’s performance and sustainability outcomes. Thus, by pooling resources and sharing the benefits, investors can enjoy the security of managed assets while contributing to sustainable and profitable agricultural practices.
Benefits
1. Accessibility: This model democratises investment opportunities, allowing smaller investors to participate in high-value projects.
2. Liquidity: Shares in fractional ownership can often be bought and sold more easily than entire assets, providing investors with greater flexibility.
3. Diversification: Investors can diversify their portfolios by purchasing shares in multiple projects, spreading risk across different assets and sectors.
